Peer-to-peer lenders have questioned the fairness and accuracy of financial product review website Defaqto’s star rating system.
A number of P2P lenders have queried why they have been given low ratings when they have had little contact with the website.
Defaqto reviews and rates a range of financial products including P2P lenders, to help consumers decide where to put their money, and gives each one a star rating out of five. It has rated 23 P2P lenders, with platforms such as RateSetter and Assetz Capital awarded five stars, but other P2P firms only have one or two.
P2P pawnbroker Unbolted has one star but its co-founder Rito Haldar told Peer2Peer Finance News that this seems misleading to investors as it does not mirror its performance or customer feedback.
“I have no idea why we have one star from Defaqto and do not recollect having any conversations with them about this,” Haldar said.
“I do remember speaking to them a long time back but then deciding against progressing with whatever commercial arrangement was being discussed.
“We are one of the best-performing P2P platforms when looking through any objective measure such as past performance, risk versus return or reputation and are currently flooded with investor funds.”
David Bradley-Ward, founder of P2P business lender Ablrate, which has two stars, said he had no idea that the platform had been rated.
“We had an enquiry many years ago to complete their forms, but we never got around to it,” he said.
“We have recently looked at them again and will probably send it over to them.”
Peer2Peer Finance News is aware of at least one other P2P lender with a low star rating that has raised this with Defaqto and asked for clarification as there has never been contact between the companies.
David Cartwright, head of insight and consulting for wealth and protection at Defaqto, said the reviews are based on “facts not opinions,” unlike a customer review website.
“Our experts select and analyse between 30 and 100 features or benefits for every product on the market,” he told Peer2Peer Finance News.
“Each product is scored against those features and assigned a rating based on a scale of one to five so you can see at a glance how the products in the market compare.”
Cartwright said Defaqto analyses P2P lenders by using its own consultants’ knowledge, as well as considering market and regulatory developments, product offerings, industry trends and consumer research.
He said Defaqto also looks at whether a platform is a trade body member, the accessibility of their loanbook and borrower data, customer support, rates, provision funds and mobile optimisation.
The ratings are reviewed each February and there is no charge for inclusion. Platforms only have to pay a fee if they want to display the star ratings on their own material.